Answer the following questions using the information below:
Ruth Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 20X5:
The company is currently using a 15% required rate of return.
-What are Bleach's and Cleanser's residual incomes based on book values, respectively?
A)$116,250; $32,500
B)$110,000; $67,500
C)$67,500; $110,000
D)$37,500; $116,250

Question

Answer the following questions using the information below:
Ruth Cleaning Products manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 20X5:
  The company is currently using a 15% required rate of return.
-What are Bleach's and Cleanser's residual incomes based on book values, respectively?
A)$116,250; $32,500 
B)$110,000; $67,500 
C)$67,500; $110,000 
D)$37,500; $116,250

Quizplus · Accepted Answer

Residual income based on book value for Bleach = ($300,000 x 0.15) - $183,750 = $116,250
Residual income based on book value for Cleanser = ($500,000 x 0.15) - $432,500 = $32,500
The best choice is not specified in the question, so there are no choice letter(s) or number(s) to provide.

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